Mealey's Securities

  • August 12, 2022

    Fracking Company’s Remediation Compliance Statements Not Actionable, Judge Rules

    HOUSTON — A federal judge in Texas on Aug. 10 ruled that although shareholders in a securities class action against a hydraulic fracturing company and three of its senior executives sufficiently pleaded the necessary elements of their federal securities law claims against some of the defendants, they failed to properly plead that the defendants’ substantial compliance statements were actionable or that one of the defendants acted with the requisite scienter.

  • August 11, 2022

    Parties’ ALJ Ruling Disputes In Line With FTC Act, Exchange Act, Justices Told

    WASHINGTON, D.C. — Two federal district courts did not err in dismissing lawsuits brought by parties challenging rulings by administrative law judges (ALJs) in which the parties alleged that the appointment of the ALJs was at odds with the U.S. Supreme Court’s holding in Lucia v. SEC, because both the Federal Trade Commission Act (FTC Act) and the Securities Exchange Act allow for judicial review of federal agency orders “during administrative adjudications,” the Federal Trade Commission and Securities Exchange Commission argue in an Aug. 8 merits brief filed jointly in appeals of both rulings in the Supreme Court.

  • August 11, 2022

    Court Failed To Consider Affirmative Defense In CFTC Order Dispute, Man Argues

    ATLANTA — A federal district court erred in granting summary judgment in favor of government prosecutors in a lawsuit seeking an order requiring a man to pay nearly $3.9 million owed as part of a U.S. Commodities Futures Trading Commission (CFTC) administrative order against the man on fraud and insider trading claims because the man provided the court with an affirmative defense that established a genuine issue of material fact, the man argues in a July 27 appellant brief filed in the 11th Circuit U.S. Court of Appeals.

  • August 11, 2022

    Judge Failed To Properly Consider Scienter Allegations In Dismissing, Panel Told

    SAN FRANCISCO — A federal district court erred in dismissing shareholder claims against a manufacturer of products and services used in the study of health and disease and two of its senior executives who are alleged to have concealed that the company’s cytometry segment sales would not meet revenue expectations because the court improperly determined that “a lack of insider trading and a single small purchase of stock” by one of the defendants “undercut any inference of scienter,” the shareholder argues in a July 25 appellant brief filed in the Ninth Circuit U.S. Court of Appeals.

  • August 10, 2022

    Graft Maker’s Statements Were Forward-Looking, Not Misleading, Panel Rules

    ATLANTA — A federal district court did not err in dismissing a shareholder’s federal securities law claims against a medical technology company and others, alleging that the defendants misrepresented the markets for the company’s nerve graft product because the defendants’ alleged misstatements were forward-looking and protected by the safe harbor provision of the Private Securities Litigation Reform Act of 1995 (PSLRA), an 11th Circuit U.S. Court of Appeals panel ruled Aug. 1 in affirming.

  • August 08, 2022

    Panel: Judgment Against Investment Adviser On Cherry-Picking Claims On Point

    NEW ORLEANS — A federal district court did not err in ruling that an investment adviser and its owners engaged in a fraudulent cherry-picking scheme, in which they allocated favorable trades to themselves and favored clients and misrepresented the firm’s allocation and trading practices in violation of federal securities laws, a Fifth Circuit U.S. Court of Appeals panel ruled Aug. 4 in affirming a liability finding and penalties against the defendants.

  • August 08, 2022

    Disgorgement Penalty Proper In Light Of Man’s Role In Securities Fraud Scheme

    RICHMOND, Va. — A Fifth Circuit U.S. Court of Appeals panel on Aug. 4 ruled that a federal district court did not abuse its discretion in holding a man alleged to have been operating a securities fraud scheme and his company jointly and severally liable for disgorgement as a penalty for their alleged operation of the scheme because the disgorgement amount ordered in the Securities and Exchange Commission civil enforcement action was warranted based on the man’s control of the company and the company’s conduct in the alleged scheme.

  • August 08, 2022

    Lack Of Scienter Pleading Leads Panel To Affirm Dismissal Of Stock-Drop Claims

    BOSTON — A First Circuit U.S. Court of Appeals panel on Aug. 5 affirmed dismissal of shareholder claims that a biopharmaceutical company and certain of its senior executives misrepresented the safety and efficacy of its cancer treatment drug in an effort to boost stock prices, ruling that the shareholder failed to sufficiently plead any actionable misstatements or omissions in making his federal securities law claims.

  • August 04, 2022

    Jury Trial Begins For Another Former Hedge Fund Exec In Securities Fraud Case

    BROOKLYN, N.Y. — Following a flurry of motions and orders, trial has started for a former hedge executive regarding an alleged scheme that involved a reinsurer, with the case docket indicating that jury selection began July 27 and opening statements were made Aug. 1.

  • August 03, 2022

    Investment Manager Files Exhibits Supporting Stay Of Insurance Policy Sale

    FORT LAUDERDALE, Fla. — An investment manager for a trust on Aug. 1 submitted notice with a Florida federal court of filing supplemental exhibits in support of its expedited motion to stay a trustee’s sale of policies terminating the trust in which the manager owns a “fractional” interest, pending appeal to the 11th Circuit Court of Appeals of the sale order of insolvent insurance policies.

  • August 02, 2022

    Investor’s Failure To Plead Demand Futility Doomed Shareholder Derivative Claims

    ATLANTA — A federal district court did not err in dismissing an investor’s claims against a shareholder derivative lawsuit against a certain senior executives and directors of a workforce payment products company on claims that the defendants breached their fiduciary duty by misrepresenting the company’s business and financial condition in an effort to artificially inflate its stock price as part of an insider selling scheme because the investor failed to sufficiently show that pre-suit demand on the board would have been futile, an 11th Circuit U.S. Court of Appeals panel ruled in affirming on July 27.

  • August 01, 2022

    Government To High Court: Securities Fraud Convictions Ruling Doesn’t Merit Review

    WASHINGTON, D.C. — In a recent amicus curiae brief citing “common law tradition,” an assistant professor of law urged the U.S. Supreme Court to grant review sought by two former hedge fund executives convicted of securities fraud in an alleged scheme that involved a reinsurer and related entities; on July 27, the government argued that the petition “arises in an interlocutory posture” and that the challenged ruling “does not conflict with any decision of this Court or another court of appeals.”

  • July 29, 2022

    5th Circuit: Disgorgement Properly Issued In SEC Action Over Investment Scheme

    HOUSTON — A federal district court did not err in ordering a man to pay disgorgement of ill-gotten gains for his role in an allegedly illegal investment scheme based on case law decided before the U.S. Supreme Court’s ruling in Liu v. SEC because amendments Congress made to the Securities Exchange Act of 1934 in the wake of Liu authorized the district court to make the ruling that it did, a divided Fifth Circuit U.S. Court of Appeals panel ruled in affirming July 19.

  • July 29, 2022

    Investor Claims Against Auto Seating Maker Lacked Showing Of Misrepresentation

    NEW YORK — A Second Circuit U.S. Court of Appeals panel on July 20 affirmed a federal district court’s dismissal of shareholder claims in a securities class action against an automotive seating manufacturer and certain of its current and former senior executives, ruling that the lead plaintiff in the action failed to sufficiently plead any actionable misstatement or omission or scienter in pleading its federal securities law claims.

  • July 28, 2022

    Traders’ Exchange Act, CEA Claims Against Options Exchange Do Not Pass Muster

    CHICAGO — A federal district court did not err in dismissing claims brought against an options exchange and two of its related entities for alleged violations of the Securities Exchange Act and the Commodity Exchange Act (CEA) based on their negligent design and oversight of a volatility index that traders were able to manipulate at the expense of other traders because the traders that brought the action failed to sufficiently state a claim for relief, a Seventh Circuit U.S. Court of Appeals panel ruled in affirming on July 27.

  • July 26, 2022

    Judge Denies Investors’ Meritless Reconsideration Bid In Stock-Drop Suit

    BROOKLYN, N.Y. — Ruling that lead plaintiffs in a securities class action alleging that a diagnostic testing company and others misrepresented the performance and viability of the company’s COVID-19 test have sought to relitigate issues that were resolved in a prior opinion, a federal judge in New York on July 21 denied the lead plaintiffs’ motion for reconsideration.

  • July 25, 2022

    Securities Claims In Drug Company Merger Deal Class Action Not Plausibly Pleaded

    PHILADELPHIA — A federal district court did not err in dismissing shareholder claims alleging that a commercial-stage biopharmaceutical company and its board of directors violated federal securities law by failing to disclose information material to shareholders’ vote on a proposed merger deal because the alleged misrepresentations cited by the lead plaintiffs were not plausibly pleaded, a Third Circuit U.S. Court of Appeals panel ruled July 20 in affirming.

  • July 21, 2022

    Panel Upholds Dismissal Of Commodities Traders’ CEA Claims On Appeal

    NEW YORK — A federal district court did not err in dismissing class claims brought by commodities traders against three banks and others on allegations that the defendants violated provisions of the Commodities Exchange Act (CEA) by engaging in fraudulent spoofing because the traders failed to sufficiently plead that they were injured under the statute by the banks’ spoofing, a Second Circuit U.S. Court of Appeals panel ruled July 20 in affirming.

  • July 21, 2022

    BorgWarner, Plaintiffs Resolve Asbestos-Liability Reporting Securities Case

    DETROIT — A federal judge on June 22 granted preliminary approval to a settlement under which BorgWarner Inc. agreed to “significant” amendments to internal procedures, resolving shareholder claims stemming from the company’s reporting of asbestos liabilities and handling of stock repurchases and allegations of insider trading.

  • July 20, 2022

    Dismissal Of Securities Claims Against Aviation Parts Maker Stands Up On Appeal

    PORTLAND, Ore. — A federal district court did not err in granting summary judgment in favor of an aviation parts manufacturing conglomerate and certain of its senior executives in a securities class action because shareholders failed to sufficiently plead falsity or loss causation in making their federal securities law claims, a Ninth Circuit U.S. Court of Appeals panel ruled July 18 in affirming.